Transocean stock rises; Analysts cite Gulf deal, operational changes

Transocean’s overhaul of its operations is more of a driver for future results than its efforts to put to bed remaining liability over the 2010 Gulf of Mexico oil spill, some analysts say.

Its shares got a nice bump from Thursday’s news that the Swiss drilling contractor agreed to settle most U.S. government claims over the disaster for $1.4 billion, a figure slightly less than it had been discussing.

The stock boost was appropriate, given the uncertainty that would remain without a settlement, but what is going on at the company is more significant, analysts at Tudor, Pickering, Holt & Co. said in a research note Friday.

“The real story at Transocean isn’t Macondo, it’s the re-engineering of the company from within,” the firm said.

Specifically, the analysts noted that the divestiture of Transocean’s jackup fleet to private equity investors a month ago reduces demands on management’s time, allowing them to focus on newer deep-water assets. They also said that the company will be able to focus more on addressing cost issues that have plagued the company.

“We think the changes necessary for higher margins are occurring, but want to see more visible evidence,” the analysts said.

The firm is maintaining a “Hold” rating on Transocean’s stock. The company is expected to release its fourth-quarter 2012 results in February.

As for the Gulf settlement, Transocean would resolve most of the liability from the federal government if the consent decree and the company’s planned guilty plea to a single misdemeanor charge of violating the Clean Water Act are approved by a federal judge in New Orleans.

The total criminal and civil fines are slightly less than the $1.5 billion figure Transocean had said in September it was negotiating with the government.

Under its plea deal, Transocean will admit that members of its crew, acting at the direction of BP’s well-site leaders on the Deepwater Horizon rig, were negligent in failing fully to investigate clear indications that BP’s Macondo well was not secure and that oil and gas were flowing into the well.

Transocean owned the Deepwater Horizon drilling rig that was working on BP’s Macondo well when the well blew out, leading to an explosion that destroyed the rig and killed 11 workers, and triggering the worst offshore oil spill in U.S. history.

Transocean shares jumped more than 6 percent Thursday following news of the settlement. On Friday morning, its shares were up another 4 percent.